“Corporate Sustainability”-– Advice For Fortune Readers — It’s Not a “Choice” but Critical to Your Business

Posted on October 8, 2015 by Hank Boerner – Chair & Chief Strategist

#Corporate Governance #Corporate Responsibility #Corporate Sustainability #Sustainability Reporting 

Two McKinsey managers present a commentary for Fortune readers — corporate executives, board members, managers -– corporate sustainability is now critical to your business.  Cited: a McKinsey survey of 340 executives; 90% of respondents initiated their sustainability journey based on risk management concerns.  Authors Jeremy Oppenheim and Martin Stuchtey present brief examples of corporate benefits of sustainability efforts (a brewing company, water utility, China-based industrial), and examples of WalMart Stores, Nike, Unilever, DuPont sustainability initiatives.  These explain the important “how” of the companies’ efforts.
Sustainability, they write, is a “crucial competitive tool” for the corporation today.  Managements are, after saying “yes” (let’s start our journey) and then setting priorities, deciding on targets, estimating costs and looking at incentives (including CEO compensation).   But on setting targets – McKinsey looked at S&P 500 companies, and while the majority now publish sustainability reports, only 1-in-5 companies have long-term goals in place even though execs consider sustainability among their top 3 concerns. (G&A Institute looks at S&P 500 reporting each year; our most recent finding is that 75% of the companies now publish reports.  The content of course is as varied as the body of companies that comprise this important and most widely-used investing benchmark.)
In our close monitoring of the corporate sector, we are seeing continuing pressure on companies to embrace sustainability as a core or crucial aspect of corporate operations.  Customers are surveying their supply chain partners to determine the activities — and the progress made or not — by their key service and product suppliers.  Third party service providers are profiling supply chain partners’ sustainability efforts.  Company boards and senior managements are carefully evaluating the activities of their investing and industry peers to benchmark where they are.  Employees are asking, “what are we doing to be more sustainable” a question that can impact recruitment and retention and employee motivation.  And more mainstream asset management houses are adopting approaches to evaluate corporate ESG performance in their portfolio management.
The Fortune commentary is very useful for your internal discussions, one more helpful aid in “making the business case” to board and senior management team.  We encourage your reading.
Here at G&A Institute we help our clients at all stages of the Sustainability journey.  Part of our pro-bono work with the Global Reporting Initiative (as their exclusive data partner in the US, UK and Ireland) involves analyzing every sustainability report published in these three countries for over 100 important data points.  This underlying “big data” is one of the important resources that we utilize in creating client services and intelligence that no other U.S. sustainability consultancy offers. For example, G&A’s competitive benchmarking services and materiality projects start by utilizing the underlying foundation of this big data which makes our process more efficient, accurate and complete.  If you’re interested in engaging with the Institute on your company’s sustainability journey, please contact Louis Coppola at lcoppola@ga-institute.com to set up a complimentary consultation call.
Like it or not, sustainability is now core to your business
(Friday – September 25, 2015)
Source: Fortune – What used to be considered green virtue has now morphed into a crucial competitive tool. That business has a role to play in improving the environment and dealing with climate change is certain